Raphael John-Lall

Di­rec­tor of the Latin Amer­i­ca En­er­gy Pro­gram at the Cen­ter for En­er­gy Stud­ies at Rice Uni­ver­si­ty’s Bak­er In­sti­tute for Pub­lic Pol­i­cy in Texas, Fran­cis­co Monal­di is con­vinced that in the short term, US sanc­tions will af­fect the de­vel­op­ment of the Man­akin-Cocuina gas field project be­tween T&T and Venezuela how­ev­er, in the long term the project will get off the ground.

In an in­ter­view with the Busi­ness Guardian, Monal­di point­ed out that Venezuela sits on 80 per cent of Latin Amer­i­ca’s nat­ur­al gas re­serves, though it is still on­ly a mi­nor pro­duc­er. Where­as T&T’s nat­ur­al gas re­serves are dwin­dling, but it counts on a large in­dus­try de­pen­dent on the re­source, from Liq­ue­fied Nat­ur­al Gas (LNG) ter­mi­nals to steel man­u­fac­tur­ing.

He gave more de­tails on the Man­akin-Cocuina gas field project.

“This is an im­por­tant de­vel­op­ment. As far as I know there were dis­cus­sions in the past about bp get­ting on the Venezue­lan side of this Man­akin-Cocuina field. There have been stud­ies be­fore. Sim­i­lar to Lo­ran-Man­a­tee gas field this is the po­ten­tial next steps in the de­vel­op­ment of gas from Venezuela that can be ex­port­ed to T&T. It’s a rel­e­vant de­vel­op­ment. The sanc­tion regime will to­tal­ly im­pact this as much as the project with Shell. Even more­so, to some ex­tent as this will be the joint de­vel­op­ment of a field that is cross bor­der and de­pend­ing on how you do it, the in­fra­struc­ture on both sides will be tied.”

In a sep­a­rate project with Venezuela, that the Unit­ed States is al­so mon­i­tor­ing, last Wednes­day, Reuters re­port­ed that en­er­gy gi­ant Shell is seek­ing a long-term li­cence from the US be­fore mak­ing a fi­nal in­vest­ment de­ci­sion on the Drag­on nat­ur­al gas project in Venezuela which was signed last De­cem­ber.

Af­ter Shell was ini­tial­ly grant­ed a two-year li­cence in 2023, the British multi­na­tion­al is now press­ing to have a 15-year US li­cence be­fore it makes the fi­nal in­vest­ment de­ci­sion (FID) to co-de­vel­op the field with the Na­tion­al Gas Com­pa­ny (NGC), Reuters re­port­ed last week.

Venezuela’s pres­i­den­tial elec­tion will take place in Ju­ly and Monal­di does not think that the US will give any green­light to this project un­til they see trans­par­ent de­mo­c­ra­t­ic elec­tions.

“I think the US will be will­ing to is­sue a two-year li­cence as they did with Shell. How­ev­er, I don’t think it will hap­pen at the mo­ment un­til the dust set­tles on the elec­tions. The US is in wait-and-see mode that Pres­i­dent Maduro is not ful­fill­ing his side of the Bar­ba­dos agree­ment. I don’t think it will hap­pen in the next few months,” said Monal­di.

Bp and Venezuela are joint­ly dis­cussing the de­vel­op­ment of a gas field in T&T, which it shares with Venezuela.

Pres­i­dent of bpTT, David Camp­bell was in Venezuela in March along with T&T’s Min­is­ter of En­er­gy Stu­art Young.

Young spoke about the project in Par­lia­ment in March.

“Yes­ter­day and the day be­fore I was in Venezuela along with BP con­duct­ing con­tin­ued con­ver­sa­tions, ne­go­ti­a­tions on be­half of the peo­ple of T&T for a project now with BP and Venezuela called Cocuina/Man­akin. That is the news that is top of the news in the glob­al en­er­gy re­ports of to­day,” he said.

Bp cur­rent­ly op­er­ates the Man­akin field, which is sit­u­at­ed in T&T wa­ters. The Lon­don-based oil com­pa­ny is eval­u­at­ing busi­ness op­por­tu­ni­ties in Venezuela amidst the Unit­ed States’ re­newed threats of sanc­tions on the Venezue­lan oil in­dus­try.

Tech­ni­cal as­pects of the Man­akin and Cocuina fields were re­viewed dur­ing the meet­ing held by del­e­ga­tions in March.

Ac­cord­ing to Venezuela’s state-owned oil com­pa­ny, PDVSA, the meet­ing was held to eval­u­ate grant­i­ng a li­cence to ex­plore, ex­ploit and ex­port non-as­so­ci­at­ed gas from the Cocuina field in Venezue­lan wa­ters, which is con­tigu­ous to Man­akin in the mar­itime area of T&T.

While the Man­akin-Cocuina field is es­ti­mat­ed to con­tain some 1 tril­lion cu­bic feet of nat­ur­al gas, the Man­a­tee field could hold as much as eight times that. For bp, this would be a wel­come source of new gas amid falling pro­duc­tion right when de­mand is go­ing up.

Busi­ness-friend­ly en­vi­ron­ment

Monal­di al­so said that the vis­it of the bpTT pres­i­dent to Venezuela is in­dica­tive of Venezuela mak­ing se­ri­ous at­tempts to in­vite for­eign in­vestors to de­vel­op its un­der-de­vel­oped gas fields.

“It is with­out a doubt that it is an­oth­er sym­bol of Venezuela not on­ly want­i­ng to mon­e­tise the gas that has been for so long un­der de­vel­oped. This is al­so a geopo­lit­i­cal play be­cause they know that the Eu­ro­peans care about the gas even more than the oil from Venezuela. This gen­er­ates in­ter­est in Spain, in France and across Eu­rope. It caus­es the Eu­ro­peans to push the US to keep flex­i­bil­i­ty with re­gard to the sanc­tions. It is a clear el­e­ment of a new strat­e­gy for Venezuela.”

He al­so said that the Man­akin-Cocuina gas field project will be more com­plex as there will be the de­vel­op­ment on the T&T side and fur­ther de­vel­op­ment of the Venezue­lan side.

“There are a lot of things to iron out and de­vel­op­ing a uni­fied field has lay­ers of com­plex­i­ty. The bot­tom­line is it is in the in­ter­est of the US to ap­prove this but there might be some hic­cups in the mid­dle. Dif­fer­ent from the mo­ment when Shell’s li­cence was ap­proved which was a mo­ment in which the US want­ed to sig­nal that they were open­ing up to Venezuela to give in­cen­tives to Pres­i­dent Maduro. Right now, they are in a more cau­tious mode as Pres­i­dent Maduro has not ful­filled the agree­ments.”

He added that pri­vate sec­tor com­pa­nies will be “very hes­i­tant” to in­vest bil­lions of dol­lars in a project un­til the po­lit­i­cal hori­zon is clear.

“I think both projects in the long run will re­quire a li­cence, but a per­spec­tive that the po­lit­i­cal sit­u­a­tion will not fall back in­to sanc­tions. I am op­ti­mistic that this project will even­tu­al­ly move ahead but it will take time. First for the ini­tial ap­proval for the li­cence and then it will take even longer time be­cause they need to de­vel­op the in­fra­struc­ture.”

Risks in­volved

Econ­o­mist Dr An­tho­ny Gon­za­les told Sun­day Busi­ness that there are risks in­volved with this project as with the Drag­on gas field and oth­er in­ter­na­tion­al projects that Venezuela is in­volved in.

“The ex­port of such gas would be sub­ject to the same poli­cies of the US re­gard­ing the Drag­on gas. It is not clear if the Of­fice of For­eign As­sets Con­trol (OFAC) spe­cial ex­cep­tion al­so would cov­er this or if an­oth­er spe­cial ap­pli­ca­tion would have to be made. Any­way, giv­en US sanc­tions on Venezuela and their pos­si­ble re­new­al lat­er in the year if Pres­i­dent Maduro does not re­spect the Bar­ba­dos Ac­cord, this project would en­tail the same risks.”